Deck 20: Inventory Management, just-In-Time, and Simplified Costing Methods

Question 1

Which of the following statements is true of costs associated with goods for sale?

A)Appraisal costs is a subcategory of shrinkage costs.
B)Special processing costs are always part of purchasing costs.
C)Opportunity costs are not recorded in the accounting system.
D)Stockout costs are costs that arise when a company runs out of a particular item for which there is no customer demand.

Answer 1

C

Question 2

Which of the following is the best definition of inventory management?

A)planning and control of the flow inventory into and through an organization
B)planning,coordinating,and controlling activities related to the flow of inventory into,through,and out of an organization
C)planning and coordinating activities related to the flow of inventory into and through an organization
D)planning,coordinating,and control of inventory into an organization

Answer 2

B

Question 3

Stockout costs arise when an organization experiences an ability to deliver its goods to its customers.

Answer 3

False
Explanation:Stockout costs are costs that arise when a company runs out of a particular item for which there is customer demand.

Question 4

Among different types of costs associated with inventory,the incoming freight charges of inventories are ________.

A)purchasing costs
B)ordering costs
C)stockout costs
D)carrying costs

Question 5

Which of the following statements is true of costs associated with goods for sale?

A)Information-gathering technology increases the reliability and timeliness of inventory information and increases the costs related to inventory.
B)Opportunity costs are not recorded in financial accounting systems because they are not a significant component in several cost categories.
C)Purchasing costs include incoming freight costs and are reduced by discounts
D)Opportunity costs are recorded in financial accounting systems but are a not significant component in several cost categories.

Question 6

Carrying costs only include those costs that are entered into the financial accounting system and do not include the opportunity cost of the investment tied up in inventory.

Question 7

Which of the following statements is true of the the economic order quantity decision model?

A)The economic order quantity increases with higher demand and higher carrying costs and decreases with higher ordering costs.
B)The simplest version of the economic order quantity model assumes there are only ordering costs,carrying costs,stockout costs,and purchasing costs.
C)It assumes the purchase order lead time is not known with certainty.
D)The larger the order quantity,the lower the annual relevant ordering costs and the higher the annual relevant carrying costs.

Question 8

Among different types of costs associated with inventory,the costs of obtaining purchase approvals are ________.

A)purchasing costs
B)ordering costs
C)stockout costs
D)carrying costs

Question 9

Which of the following is the correct mathematical expression to calculate annual relevant ordering costs?

A)Demand in units for a specified period / (Relevant ordering cost per purchase order × Size of each order)
B)Size of each order × Relevant ordering cost per purchase order / Demand in units for a specified period
C)(Demand in units for a specified period / Size of each order)× Relevant ordering cost per purchase order
D)(Demand in units for a specified period - Size of each order)× Relevant ordering cost per purchase order

Question 10

Managing inventories to increase net income requires companies to effectively manage costs associated with goods for sale.
Required:
Classify the below listed items as either Purchasing Costs,Ordering Costs,Carrying Costs,Stockout Costs,Costs of Quality,or Shrinkage Costs.

Question 11

Among different types of costs associated with inventory,the opportunity cost of the investment tied up in inventory is a(n)________.

A)purchasing cost
B)ordering cost
C)stockout cost
D)carrying cost

Question 12

Shrinkage is measured by adding (a)the cost of the inventory recorded on the books in the absence of theft and other incidents just mentioned,and (b)the cost of inventory when physically counted.

Question 13

All inventory costs are available in financial accounting systems.

Question 14

Purchasing costs arise in preparing and issuing purchase orders,receiving and inspecting the items included in the orders,and matching invoices received,purchase orders,and delivery records to make payments.

Question 15

Inventory management is the planning,organizing,and controlling activities that focus on the flow of materials into,through,and out of the organization.

Question 16

The costs that result when a company runs out of a particular item for which there is a customer demand are ________.

A)shrinkage costs
B)shortage costs
C)stockout costs
D)EOQ estimation costs

Question 17

The costs that result from theft of inventory are ________.

A)shrinkage costs
B)external failure costs
C)stockout costs
D)costs of quality

Question 18

Freight in charges forms part of purchasing costs of inventory.

Question 19

Among different types of costs associated with inventory,four categories of quality costs are ________.

A)control costs,inspection costs,internal failure costs,and external failure costs
B)prevention costs,inspection costs,internal failure costs,and external failure costs
C)prevention costs,appraisal costs,internal failure costs,and external failure costs
D)prevention costs,control costs,internal failure costs,and external failure costs

Question 20

The opportunity cost of the stockout is the lost revenue on the sale not made plus any lost revenue on future sales due to customer ill will.

Question 21

Delinz Company sells 115 hams per week.Purchase-order lead time is 6 weeks and the economic-order quantity is 210 hams.What is the reorder point?

A)1950 hams
B)690 hams
C)1260 hams
D)210 hams

Question 22

Globe Inc.is a distributor of DVDs.DVD Mart is a local retail outlet which sells blank and recorded DVDs.DVD Mart purchases DVDs from Globe at $29.00 per DVD;DVDs are shipped in packages of 70.Globe pays all incoming freight,and DVD Mart does not inspect the DVDs due to Globe's reputation for high quality.Annual demand is 320,000 DVDs at a rate of 6500 DVDs per week.DVD Mart earns 13% on its cash investments.The purchase-order lead time is one week.The following cost data are available:

What is the economic order quantity?

A)63.26 packages
B)44.19 packages
C)5)81 packages
D)62.49 packages

Question 23

Globe Inc.is a distributor of DVDs.DVD Mart is a local retail outlet which sells blank and recorded DVDs.DVD Mart purchases DVDs from Globe at $28.00 per DVD;DVDs are shipped in packages of 68.Globe pays all incoming freight,and DVD Mart does not inspect the DVDs due to Globe's reputation for high quality.Annual demand is 321,000 DVDs at a rate of 6100 DVDs per week.DVD Mart earns 11% on its cash investments.The purchase-order lead time is one week.The following cost data are available:

What are the relevant total costs?

A)$18,758
B)$84,917
C)$15,471
D)$13,124

Question 24

Short Grass Incorporated is a distributor of golf balls.Martin's Golf Supplies is a local retail outlet which sells golf balls.Martin's purchases the golf balls from Short Grass Incorporated at $0.95 per ball;the golf balls are shipped in cartons of 72.Short Grass Incorporated pays all incoming freight,and Martin's Golf Supplies does not inspect the balls due to Short Grass' reputation for high quality.Annual demand is 162,520 golf balls at a rate of 3591 balls per week.Martin's Golf Supplies earns 12% on its cash investments.The purchase-order lead time is one week.The following cost data are available:

Purchasing at the EOQ recommended level,what are the relevant total costs? (Round costs to the nearest cent and quantities to the nearest whole number.Your answer might be slightly different from the best answer due to rounding. )

A)$1584
B)$2313
C)$1157
D)$3168

Question 25

Miniature Company sells stuffed tigers.Birtal Inc.manufactures many different stuffed animals.Miniature orders 21,200 tigers per year,22 per week,at $10 per tiger.The manufacturer covers all shipping costs.Miniature earns 20% on its cash investments.The purchase-order lead time is 2 weeks.Miniature sells 320 tigers per week.The following data are available (based on management's estimates):

What is the economic order quantity using the estimated amounts?

A)698.3 stuffed tigers
B)329.2 stuffed tigers
C)232.8 stuffed tigers
D)493.8 stuffed tigers

Question 26

Globe Inc.is a distributor of DVDs.DVD Mart is a local retail outlet which sells blank and recorded DVDs.DVD Mart purchases DVDs from Globe at $25.00 per DVD;DVDs are shipped in packages of 63.Globe pays all incoming freight,and DVD Mart does not inspect the DVDs due to Globe's reputation for high quality.Annual demand is 314,000 DVDs at a rate of 6600 DVDs per week.DVD Mart earns 15% on its cash investments.The purchase-order lead time is one week.The following cost data are available:

What are the annual relevant ordering costs?

A)$91,977
B)$11,949
C)$8449
D)$8353

Question 27

Beryl Company sells 900 flash drives per week.Purchase-order lead time is 2 weeks and the economic-order quantity is 1625 units.What is the reorder point?

A)3250 units
B)1450 units
C)1800 units
D)1625 units

Question 28

Short Grass Incorporated is a distributor of golf balls.Martin's Golf Supplies is a local retail outlet which sells golf balls.Martin's purchases the golf balls from Short Grass Incorporated at $1.15 per ball;the golf balls are shipped in cartons of 72.Short Grass Incorporated pays all incoming freight,and Martin's Golf Supplies does not inspect the balls due to Short Grass' reputation for high quality.Annual demand is 158,520 golf balls at a rate of 3891 balls per week.Martin's Golf Supplies earns 8% on its cash investments.The purchase-order lead time is one week.The following cost data are available:

What is the economic order quantity? (Round costs to the nearest cent and quantities to the nearest whole number. )

A)183 cartons
B)274 cartons
C)275 cartons
D)367 cartons

Question 29

The purchase-order lead time is the ________.

A)time between placing an order and its delivery
B)time between receiving a customer order and producing the products
C)time between receiving a customer order and delivering the items
D)time required to correct errors in the defective products

Question 30

The following information applies to Krynton Company,which supplies microscopes to laboratories throughout the country.Krynton purchases the microscopes from a manufacturer which has a reputation for very high quality in its manufacturing operation.

What is the reorder point? (Assume a 365 day year. )

A)1040 units
B)2614 units
C)2650 units
D)2944 units

Question 31

Short Grass Incorporated is a distributor of golf balls.Martin's Golf Supplies is a local retail outlet which sells golf balls.Martin's purchases the golf balls from Short Grass Incorporated at $1.15 per ball;the golf balls are shipped in cartons of 52.Short Grass Incorporated pays all incoming freight,and Martin's Golf Supplies does not inspect the balls due to Short Grass' reputation for high quality.Annual demand is 157,520 golf balls at a rate of 3291 balls per week.Martin's Golf Supplies earns 12% on its cash investments.The purchase-order lead time is one week.The following cost data are available:

Purchasing at the EOQ recommended level,how many deliveries will be made during each time period? (Round costs to the nearest cent and quantities to the nearest whole number. )

A)2 deliveries
B)4)3 deliveries
C)9)8 deliveries
D)12 deliveries

Question 32

Relevant total costs in the economic order quantity decision model equal relevant ordering costs plus which of the following costs?

A)carrying costs
B)stockout costs
C)quality costs
D)purchasing costs

Question 33

The economic order quantity model completely ignores ________.

A)carrying costs
B)ordering costs
C)stockout costs
D)the size of a purchase order

Question 34

Vision Company sells optical equipment.Blitz Company manufactures special glass lenses.Vision orders 11,400 lenses per year,220 per week,at $40 per lens.Blitz covers all shipping costs.Vision earns 22% on its cash investments.The purchase-order lead time is 3.0 weeks.Vision sells 315 lenses per week.The following data are available:

What is the reorder point?

A)660 lenses
B)945.0 lenses
C)1318 lenses
D)1605.0 lenses

Question 35

Vision Company sells optical equipment.Blitz Company manufactures special glass lenses.Vision orders 11,700 lenses per year,260 per week,at $38 per lens.Blitz covers all shipping costs.Vision earns 22% on its cash investments.The purchase-order lead time is 4.0 weeks.Vision sells 315 lenses per week.The following data are available:

What is the economic order quantity for Vision?

A)439 lenses
B)356 lenses
C)276 lenses
D)195 lenses

Question 36

Globe Inc.is a distributor of DVDs.DVD Mart is a local retail outlet which sells blank and recorded DVDs.DVD Mart purchases DVDs from Globe at $29.00 per DVD;DVDs are shipped in packages of 65.Globe pays all incoming freight,and DVD Mart does not inspect the DVDs due to Globe's reputation for high quality.Annual demand is 321,000 DVDs at a rate of 6800 DVDs per week.DVD Mart earns 15% on its cash investments.The purchase-order lead time is one week.The following cost data are available:

What are the annual relevant carrying costs?

A)$9362
B)$9209
C)$849
D)$6511

Question 37

Globe Inc.is a distributor of DVDs.DVD Mart is a local retail outlet which sells blank and recorded DVDs.DVD Mart purchases DVDs from Globe at $30.00 per DVD;DVDs are shipped in packages of 66.Globe pays all incoming freight,and DVD Mart does not inspect the DVDs due to Globe's reputation for high quality.Annual demand is 312,000 DVDs at a rate of 6500 DVDs per week.DVD Mart earns 10% on its cash investments.The purchase-order lead time is one week.The following cost data are available:

How many deliveries will be made during each time period?

A)63.71 deliveries
B)39.89 deliveries
C)90.10 deliveries
D)62.84 deliveries

Question 38

Under economic-order-quantity decision model,which of the following is an assumption? assumed that ________.

A)the quantity ordered can vary at each reorder point
B)demand,ordering costs,and carrying costs are uncertain
C)the purchasing cost per unit is affected by the order quantity
D)the same quantity is ordered at each reorder point

Question 39

Which of the following statements is true of the economic-order-quantity decision model?

A)It assumes purchasing costs are relevant because the cost per unit changes due to the quantity ordered.
B)Demand,ordering costs,and carrying costs are all known with certainty.
C)It assumes that stockout costs are relevant even if no stockouts occur.
D)It assumes that ordering costs and carrying costs are irrelevant.

Question 40

Short Grass Incorporated is a distributor of golf balls.Martin's Golf Supplies is a local retail outlet which sells golf balls.Martin's purchases the golf balls from Short Grass Incorporated at $0.85 per ball;the golf balls are shipped in cartons of 42.Short Grass Incorporated pays all incoming freight,and Martin's Golf Supplies does not inspect the balls due to Short Grass' reputation for high quality.Annual demand is 158,520 golf balls at a rate of 3191 balls per week.Martin's Golf Supplies earns 7% on its cash investments.The purchase-order lead time is one week.The following cost data are available:

If Martin's makes an order (1 / 12 of annual demand)once per month,what are the relevant total costs? (Round costs to the nearest cent and quantities to the nearest whole number. )

A)$1560.00
B)$514.09
C)$2075.03
D)$3120.00

Question 41

The Allianz Company produces a specialty wood furniture product,and has the following information available concerning its inventory items:

Annual demand is 34,000 packages per year.The purchase price per package is $51.
What is the annual relevant ordering costs?

A)$6837
B)$10,428
C)$7873
D)$11,300

Question 42

The Allianz Company produces a specialty wood furniture product,and has the following information available concerning its inventory items:

Annual demand is 33,000 packages per year.The purchase price per package is $50.
What is the annual relevant carrying costs?

A)$16,308
B)$13,702
C)$10,491
D)$2894

Question 43

The optimal safety stock level is the quantity of safety stock that minimizes the sum of the annual relevant ________.

A)stockout costs and carrying costs
B)ordering costs and carrying costs
C)ordering costs and stockout costs
D)ordering costs and purchasing costs

Question 44

Due to unprecedented growth during the year,Flowers by Kelly decided to use some of its surplus cash to increase the size of several inventory order quantities that had been previously determined using an EOQ model.
Required:
Identify whether increasing the size of inventory orders will increase,decrease,or have no effect on each of the following items.

Question 45

The Allianz Company produces a specialty wood furniture product,and has the following information available concerning its inventory items:

Annual demand is 35,000 packages per year.The purchase price per package is $52.
How many deliveries will be required at the economic order quantity?

A)16.36 deliveries
B)15.91 deliveries
C)20.12 deliveries
D)23.14 deliveries

Question 46

If Premium Company has a safety stock of 480 units and the average daily demand is 68 units,how many days can be covered if the shipment from the supplier is delayed by 4 days?

A)7 days
B)4 days
C)11 days
D)3 days

Question 47

All of the following are reasons why a company might carry a safety stock except:

A)a buffer against unexpected increases in demand
B)a contingency against the uncertainty about lead time
C)a strategy to lower the carrying cost of inventory
D)a way of softening the impact of sudden unavailability of stock from suppliers

Question 48

The Allianz Company produces a specialty wood furniture product,and has the following information available concerning its inventory items:

Annual demand is 33,000 packages per year.The purchase price per package is $50.
What are the total relevant costs,assuming the quantity ordered equals 1500 units?

A)$16,405
B)$18,280
C)$16,780
D)$22,405

Question 49

The following information applies to Krynton Corp.which supplies microscopes to laboratories throughout the country.Krynton purchases the microscopes from a manufacturer which has a reputation for very high quality in its manufacturing operation.

Assuming each order was made at the economic order quantity amount,what is the cost of placing an order?

A)$850 per order
B)$153 per order
C)$144 per order
D)$900 per order

Question 50

The following information applies to Krynton Corp.which supplies microscopes to laboratories throughout the country.Krynton purchases the microscopes from a manufacturer which has a reputation for very high quality in its manufacturing operation.

What is the economic order quantity assuming each order was made at the economic-order-quantity amount?

A)2057 units
B)1000 units
C)1108 units
D)3200 units

Question 51

The reorder point is the quantity level of inventory at which a new purchase order is made.

Question 52

The Allianz Company produces a specialty wood furniture product,and has the following information available concerning its inventory items:

Annual demand is 33,000 packages per year.The purchase price per package is $49.
What are the relevant total costs at the economic order quantity?

A)$18,780
B)$20,387
C)$11,223
D)$12,694

Question 53

The EOQ model factors in the probability of stockouts.

Question 54

If Kenton Inc.has a safety stock of 215 units and the average weekly demand is 35 units,how many days can be covered if the shipment from the supplier is delayed by 16 days?

A)16 days
B)43 days
C)59 days
D)27 days

Question 55

The Allianz Company produces a specialty wood furniture product,and has the following information available concerning its inventory items:

Annual demand is 30,000 packages per year.The purchase price per package is $53.
Which of the following statements is true of Allianz's EOQ system costs?

A)At EOQ,the annual relevant ordering costs is exactly the half of annual relevant carrying costs.
B)At EOQ,the annual relevant carrying costs is higher than the annual relevant ordering costs.
C)At EOQ,the annual relevant carrying costs is exactly the half of the annual relevant total costs.
D)At EOQ,the annual relevant carrying costs is equal to the annual relevant total costs.

Question 56

The EOQ model is solved using calculus but the key intuition is that relevant total costs are minimized when relevant ordering costs equal relevant carrying costs.

Question 57

Companies use safety stock as a buffer against unexpected decreases in demand.

Question 58

The Allianz Company produces a specialty wood furniture product,and has the following information available concerning its inventory items:

Annual demand is 33,000 packages per year.The purchase price per package is $49.
What is the economic order quantity?

A)1875.37 units
B)1059.38 units
C)1498.19 units
D)2490.78 units

Question 59

The optimal safety-stock level is the quantity of safety stock that minimizes the sum of annual relevant stockout and ordering costs.

Question 60

The following information applies to Krynton Corp.which supplies microscopes to laboratories throughout the country.Krynton purchases the microscopes from a manufacturer which has a reputation for very high quality in its manufacturing operation.

What are the annual relevant ordering costs,assuming that relevant total costs are minimal?

A)$824
B)$3719
C)$3500
D)$3294

Question 61

Picture Company has one particular product that has an annual demand of 5,000 units.Total manufacturing costs per unit total $50.Ordering costs for the product total $60 per purchase order.Currently,the carrying costs per unit are 25% of manufacturing costs.
Required:
Determine the economic manufacturing order quantity.

Question 62

The annual relevant carrying costs of inventory consists of the sum of the ________.

A)relevant ordering costs and the relevant costs of quality
B)relevant ordering costs plus the relevant opportunity costs of capital
C)relevant incremental costs plus the relevant opportunity costs of capital
D)relevant incremental costs plus the relevant ordering costs

Question 63

An inventory item of Avizone Corp.has an average daily demand of 25 units with a maximum daily demand of 30 units.The economic order quantity is 500 units.Without safety stocks,the reorder point is 125 units.Safety stocks are set at 235 units.
Required:
a.Determine the reorder point with safety stocks.
b.Determine the maximum inventory level.
c.Determine the average lead time.

Question 64

The costs of storage space owned are always relevant costs of carrying inventory.

Question 65

Which of the following is not a reason why a company would adopt JIT purchasing practices?

A)high shrinkage costs
B)low ordering costs
C)low carrying costs of inventory
D)reliable supply chains

Question 66

Why do conflicts arise between the EOQ model's optimal order quantity and the order quantity that managers regard as optimal?

Question 67

Increases in the carrying cost and decreases in the ordering cost per purchase order result in ________.

A)smaller EOQ amounts
B)larger EOQ amounts
C)larger relevant total costs
D)smaller relevant total costs

Question 68

The only product of a company has an annual demand of 14,000 units.The cost of placing an order is $70 and the cost of carrying one unit in inventory for one year is $20.
Required:
Determine the economic order quantity.

Question 69

Discuss considerations that should be fully taken into account when developing inventory related relevant costs for use in an economic order quantity (EOQ)model.

Question 70

Clothes,Inc. ,has an average annual demand for red,medium polo shirts of 25,000 units.The cost of placing an order is $80 and the cost of carrying one unit in inventory for one year is $25.
Required:
a.Use the economic-order-quantity model to determine the optimal order size.
b.Determine the reorder point assuming a lead time of 10 days and a work year of 250 days.
c.Determine the safety stock required to prevent stockouts assuming the maximum lead time is 20 days and the maximum daily demand is 125 units.

Question 71

For supply item ABC,Andrews Company has been ordering 125 units based on the recommendation of the salesperson who calls on the company monthly.A new purchasing agent has been hired by the company who wants to start using the economic-order-quantity method and its supporting decision elements.She has gathered the following information:

Required:
Determine the EOQ,average inventory,orders per year,average daily demand,reorder point,annual ordering costs,and annual carrying costs.

Question 72

Which of the following statements is true of just-in-time (JIT)purchasing?

A)In JIT purchasing,the optimal safety-stock level is the quantity of safety stock that minimizes the sum of annual relevant stockout and carrying costs.
B)JIT purchasing is guided solely by the EOQ model because that model emphasizes the tradeoff between relevant carrying and ordering costs.
C)In JIT purchasing,raw materials (or goods)are purchased so that products are delivered just as needed for production or sales.
D)Only disadvantage of JIT purchasing is the higher level carrying and inspection costs.

Question 73

Which of the following costs is a relevant inventory stockout cost?

A)The costs of obsolescence and costs of insurance that change with the quantity of inventory held.
B)The return forgone by investing capital in inventory rather than elsewhere.
C)The lost contribution margin on sales forgone as a result of customer dissatisfaction due to unavailability of goods.
D)The costs of storage space owned that cannot be used for other profitable purposes when inventories decrease.

Question 74

For inventory carrying costs,which of the following statements is true of the relevant opportunity cost of capital of inventory?

A)It is the return received by investing capital in inventory rather than elsewhere.
B)It is calculated as the per-unit costs of carrying inventory divided by the required rate of return .
C)It is the return foregone by investing capital elsewhere rather than in inventory.
D)It is calculated as the required rate of return multiplied by the per-unit costs of acquiring inventory including the purchase price,incoming freight,and incoming inspection.

Question 75

Ralph was in the process of completing the quarterly planning for the purchasing department when a major computer malfunction lost most of his data.For direct material XXX he was able to recover the following:

Ralph purchases at the EOQ quantity level.
Required:
Determine the annual demand,the cost of placing an order,the annual carrying cost of one unit,and the economic order quantity.

Question 76

The cost of breakage and obsolescence are relevant incremental costs of carrying inventory.

Question 77

The IBP Grocery orders most of its items in lot sizes of 10 units.Average annual demand per side of beef is 720 units per year.Ordering costs are $25 per order with an average purchasing price of $100.Annual inventory carrying costs are estimated to be 40% of the unit cost.
Required:
a.Determine the economic order quantity.
b.Determine the annual cost savings if the shop changes from an order size of 10 units to the economic order quantity.
c.Since the shelf life is limited,the IBP Grocery must keep the inventory moving.Assuming a 360-day year,determine the optimal lot size under each of the following: (1)a 20-day shelf life and (2)a 10-day shelf life.

Question 78

Which of the following statements is true of relevant inventory costs?

A)The salaries paid to clerks,stock keepers,and materials handlers are relevant carrying costs if they are unaffected by changes in inventory levels.
B)The costs of expediting an order from a supplier are relevant incremental costs of stockouts.
C)Warehouse rent,warehouse workers' salaries and costs of insurance,that change with the quantity of inventory held are irrelevant carrying costs.
D)Those ordering costs that change with the number of orders placed are irrelevant ordering costs.

Question 79

The executive vice president of Robotics,Inc. ,is concerned because the cost of materials has not been in line with the budget for several periods,even after implementing an EOQ model.The company has the normal direct material variance computations of price and efficiency at the end of each month.The price variance of the direct materials used is usually near expectations.The vice president does not understand how the budget differences are always larger than the material price variances.
Required:
What explanation can you give for the evaluation problems presented?

Question 80

Which of the following costs is a relevant inventory carrying cost of carrying inventory?

A)The lost contribution margin on future sales forgone as a result of customer dissatisfaction in product quality.
B)The lost contribution margin on sales forgone because of the shortage of inventory.
C)The costs of storage space owned that cannot be used for other profitable purposes when inventories decrease.
D)The costs of shrinkage.